No credit check car loan alternatives

If you’re worried about your credit history preventing you from getting approved for a car loan, be very wary about applying with a lender that claims to offer no credit check car loans. Not only will these lenders offer high interest rates, but you also run the risk of falling victim to a car loan scam.

But there are plenty of no credit check car loan alternatives in Canada. Keep reading to find out where to get a car loan even if your credit history is less than perfect.

Are there no credit check car loans in Canada?

No credit check car loans aren’t widely available in Canada. Most lenders will check your credit history before approving your loan. This helps them determine whether you’re in a good financial position and can afford to repay a loan.

It’s vital that you proceed with caution before applying with a lender that claims to offer no credit check car loans. Lenders will assume that you have bad credit and pose a high level of risk, so you can expect steep car loan interest rates. You also need to be wary of offers that sound too good to be true. These may turn out to be car loan scams.

There are several no credit check car loan alternatives available. These lenders specialize in helping borrowers with bad credit find auto financing, and they don’t have the same strict eligibility requirements as traditional lenders. But watch out for steep interest rates.

No credit check auto loan alternatives

Here’s a list of providers you can apply to if you have poor credit or no credit. You’ll need to go through a credit check as part of the application process, but these providers have lenient eligibility requirements.

CarsFast

How are they similar to no credit check car loans?

CarsFast is an online car financing comparison platform. By filling out a single online application, you can get pre-approved by lenders within CarsFast’s auto financing network and compare different rates. CarsFast’s lending partners specialize in loans for people with limited or less-than-perfect credit. Once you choose a loan, you can shop vehicles from 350 dealerships across Canada.

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Dive deeper: CarsFast review

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Loans Canada

How are they similar to no credit check car loans?

Loans Canada is an online loan broker that lets you compare car loan offers from multiple lenders. Fill out an online application, and get matched with lenders that service borrowers with your financial profile. It’s then a matter of comparing pre-approval offers and deciding where to apply for a loan. Loans Canada is a free service, and bad credit won’t stop you getting a loan.

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Dive deeper: Loans Canada car loans review

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Dealerhop

How are they similar to no credit check car loans?

Dealerhop is a free online car financing marketplace that matches borrowers with car loans that will be fulfilled by partner companies. Simply apply online by providing details of your income, employment, credit history and the car you want to buy. Dealerhop will match you with a nearby dealership that offers a vehicle with suitable financing. All types of credit are accepted, and the vehicle you buy can be delivered to your door.

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Dive deeper: Dealerhop review

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Autorama

How are they similar to no credit check car loans?

Autorama is a Toronto-based dealership that lets you buy and finance vehicles online as well as in person. You can get pre-approved online in a matter of minutes, and all types of credit are accepted. No down payment financing is also available on approved credit. Plus, Autorama offers same-day delivery.

Dive deeper: Autorama

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Auto Credit Deals

How are they similar to no credit check car loans?

Auto Credit Deals is an online car loan platform where you can access financing offers from 350 dealers across Canada. It’s easy to apply online, and Auto Credit Deals can connect you with dealerships that work with your credit score. Bad or no credit borrowers are accepted. $0 down payment financing is also available.

Dive deeper: Auto Credit Deals review

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Driving With Steve

How are they similar to no credit check car loans?

Driving With Steve is an online car loan broker. Once you fill out an application with details of your financial situation and the type of car you want to buy, you can compare financing rates and vehicles from among a network of certified dealerships across Canada. Bad credit is accepted, and there are no fees for applying with Driving With Steve.

Dive deeper: Driving With Steve review

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Kaicen Financial

How are they similar to no credit check car loans?

Kaicen Financial is an online broker that serves all of Ontario. It’s accredited with the Better Business Bureau and specializes in auto financing for both prime and non-prime borrowers, so you can apply if you have bad credit or no credit. $0 down payment financing is available, and Kaicen Financial will contact you within 24 hours of receiving your application to discuss your financing options.

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How do no credit check car loans work?

No credit check car loans work like any other car loan. The difference is that the lender assumes you have a bad credit history—possibly worse than you actually have. Because of this, you’ll likely end up with:

• A large down payment. Since the lender will assume you have bad credit or no credit, it’ll be hard to get full financing.
• High rates. No credit check lenders tend to offer borrowers high interest rates, which are typically less favourable than rates from lenders who’ll fully assess your individual financial situation.
• Long loan terms. Many no credit check car loans have terms of over five years. Taking into account high rates, you could easily end up paying multiple times your car’s value.

Since no credit check car loans likely have high interest rates and unfavourable terms, they should only be used when no other alternatives are available.

What do I need to get approved for a no credit check car loan?

To get approved for a car loan with no credit check, you’ll need to show that you have a steady income. Lenders will ask for copies of your pay stubs or bank statements to determine whether you can afford car loan repayments. Your chance of approval is strong if you’ve been at your current job and home for many years, have a decent income and can make a large down payment.

What are the dangers of a no credit check car loan?

• Large repayments. Even with long terms, no credit check car loans come with costly repayments, thanks to high rates. Use our calculator to make sure you’re signing up for a loan you can afford.
• Repossession. If you can’t keep up with loan repayments, you could end up losing your car.
• Car loan scams. While no credit check car loans aren’t necessarily a scam, you might want to look out for warning signs of a car loan scam like requiring an upfront payment or guaranteeing approval before you’ve provided information. If it looks too good to be true, scrutinize the terms, conditions and application requirements as well as customer reviews and any other information available on the lender. Only proceed if you’re confident that the financial institution is legitimate.

How to increase your chances of approval

If you’re searching for no credit check car loans, you may have had banks turn down your application in the past. The good news is that there are several simple things you can do to increase your chances of approval such as:

• Earn a steady income. If you earn a high income and have held down a steady job for a long time, you’re more likely to get approved than someone who has changed jobs in the past six months.
• Save a larger down payment. Saving a bigger down payment shows lenders that you are financially responsible. It also means that you need to borrow less, which makes you seem like a less risky prospect in the eyes of a lender.
• Check the eligibility requirements. Many lenders list their car loan eligibility requirements on their website. Check this criteria before you apply to make sure you tick all the boxes.
• Prepare your paperwork in advance. Review the lender’s list of required documents, so you can get everything ready in advance.
• Improve your credit score. Paying off existing debts, disputing inaccurate information in your credit file and reducing your credit utilization ratio will boost your credit score and improve your chances of getting approved.

Bottom line

If you’ve got bad credit or no credit, there are several alternative options to consider instead of a no credit check car loan. Check to see if you pre-qualify for a car loan and shop around to find the lowest rate.

Frequently asked questions

• Will I have to pay any fees with a no credit check car loan?

  Yes. Check the loan contract for details on origination fees and any ongoing fees that apply. You should also check to see how much a missed payment will cost and if there are any other fees buried in the fine print.

• Are there any ways to improve my credit score?

  You can take several simple steps to raise your credit score and improve your borrowing prospects. Get a credit card with a modest limit and regularly make purchases and repayments to improve your credit. (The key is to promptly pay off your balance and not let it accumulate on the card).

  Also try to pay down your debt, if not eliminate some sources of debt altogether. This will look great on your credit history and improve your chances of getting approved for a car loan. Check out our credit repair guide for more information.

• Will I need a cosigner?

  It depends on your financial situation. Having a cosigner with strong credit may not be essential for loan approval, but it could help you qualify for larger loan amounts and lower interest rates.

• How can I find a reputable lender?

  The key to this is research. Make sure the lender is a legitimate provider, and check independent online reviews from other customers. Also carefully read the loan terms to make sure you're getting what you were promised.

• Can I get a car loan with bad credit in Canada?

  Yes. There are some alternative lenders in Canada that work with bad credit borrowers. These lenders will consider your income, employment history and existing debt level to determine whether you can afford to repay your loan. However, bad credit car loans come with high interest rates, so make sure you're aware of the total cost of a loan before signing a contract.